Downside option traders racked up huge gains in International Paper (IP) today.
On Nov. 7, Market Rebellion’s Unusual Option Activity Service found that 3,800 Weekly $34 puts, expiring today, Nov. 10, were bought for $0.30 to $0.43 with shares at $34.05. This was clearly fresh buying, as open interest in the contract was just 57 before the activity appeared.
Those puts have traded for as much as $1.16 this session, an 169.77% return, while the stock fell 3.35% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.
IP was down 0.51% to $33.09 at the close of trade.
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